PLEASE NOTE THAT FURTHER PAYMENT IS DEPENDENT ON THE WEBSITE BEING 100% COMPLETE WITH NO FAULTS WHATSOEVER.
SIGNED
PROFESSOR ALAN F HARRISON
Key Principles
The core principle behind this type of contract is that the obligation to pay is conditional upon the successful completion of the work. This means the contractor or service provider must first fulfill their part of the agreement, and only then does the client become obligated to make payment.
Key aspects of this arrangement include:
Milestone-based Payments: A variation of this model is when a contract breaks down the work into specific, measurable milestones. Payment is then made after each milestone is completed and verified, rather than waiting for the entire project to finish. This is common for long-term projects to manage cash flow for the contractor.
Verification and Acceptance: The contract will typically include a process for the client to inspect and formally accept the completed work. This acceptance confirms that the work meets the agreed-upon standards and is a prerequisite for the payment to be triggered.
Final Payment and Retainage: In some cases, a portion of the final payment may be held back (known as retainage) until a certain period after completion, to ensure there are no defects or issues that arise post-delivery. Once this period passes and all conditions are met, the final retainage is released.
Legal Confirmation
The validity of these contracts is rooted in the fundamental principles of international contract law, particularly the concept of reciprocal obligations. The work and the payment are dependent covenants, meaning one party's duty is conditional on the other's performance. The United Nations Convention on Contracts for the International Sale of Goods (CISG), while primarily for goods, provides a foundational legal framework for such principles, which are widely applied in service contracts as well. The principle of good faith and fair dealing, a cornerstone of international commercial law, requires both parties to honor their reciprocal obligations as defined in the contract.
Key Principles
The core principle behind this type of contract is that the obligation to pay is conditional upon the successful completion of the work. This means the contractor or service provider must first fulfill their part of the agreement, and only then does the client become obligated to make payment.
Key aspects of this arrangement include:
Milestone-based Payments: A variation of this model is when a contract breaks down the work into specific, measurable milestones. Payment is then made after each milestone is completed and verified, rather than waiting for the entire project to finish. This is common for long-term projects to manage cash flow for the contractor.
Verification and Acceptance: The contract will typically include a process for the client to inspect and formally accept the completed work. This acceptance confirms that the work meets the agreed-upon standards and is a prerequisite for the payment to be triggered.
Final Payment and Retainage: In some cases, a portion of the final payment may be held back (known as retainage) until a certain period after completion, to ensure there are no defects or issues that arise post-delivery. Once this period passes and all conditions are met, the final retainage is released.
Legal Confirmation
The validity of these contracts is rooted in the fundamental principles of international contract law, particularly the concept of reciprocal obligations. The work and the payment are dependent covenants, meaning one party's duty is conditional on the other's performance. The United Nations Convention on Contracts for the International Sale of Goods (CISG), while primarily for goods, provides a foundational legal framework for such principles, which are widely applied in service contracts as well. The principle of good faith and fair dealing, a cornerstone of international commercial law, requires both parties to honor their reciprocal obligations as defined in the contract.
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